More than half of mining’s equity investment lost

By Staff Reporter

Posted on Monday, 22 October 2012

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The mining industry across Australia is struggling against more profitable offshore options, with the majority of investment dollars being spent elsewhere, according to the CEO of a peak mining industry body.

“The Australian mineral exploration and mining industry is facing an environment where discoveries are reducing, equity investment is being lost to competitive offshore projects,” said Simon Bennison, CEO of the Association of Mining and Exploration Companies (AMEC).

“Recently, Port Jackson Partners released a report which clearly identified Australia was far less competitive than its international counterparts.

“It found that capital costs are rising more rapidly here than in the rest of the world, with iron ore projects now 30 per cent more expensive than the global average and thermal coal 66 per cent more expensive,” Mr Bennison said.

However, Western Australia will see its future solidify in the mining sector, with a number of growth plans noted by AMEC.

As WA also feels the drop in exploration (as a proportion of total metres drilled, WA’s greenfields exploration has fallen from 34 per cent to 25 per cent over the past 9 years).

“AMEC believes policy reform now is critical in order to maintain and enhance WA’s position as an attractive jurisdiction for mineral exploration and mining investment,” he said.

The WA Policy Platform, released last week by AMEC, recommended that sound economic and regulatory conditions to provide clarity for investment should be put in place to help encourage mineral exploration and mining across the state.

“On top of [investment moving overseas], small mining and junior mineral exploration companies are experiencing increased cost pressures due to a range of additional operating expenses, taxes and levies that will bite further into limited working capital and cash flows.

“In recognising these issues and in order to seek solutions AMEC has prepared this Policy Platform.”

A framework that would detail royalties, payroll tax and cost recovery of government services; an increase in land access; development of approval reform processes; and reviewing the Environmental Protection Act appeals process were listed as earmarked items to look at.